10-Q 1 rmmi_10q-043007.txt FORM 10-Q FOR THE PERIOD ENDED 04/30/07 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2007. OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______ Commission file number: 0-9060 ROCKY MOUNTAIN MINERALS, INC. ------------------------------------------------------ (Exact name of Registrant as specified in its Charter) Wyoming 83-0221102 ------------------------------ ----------------------------------- (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 2480 North Tolemac Way, Prescott, AZ 86305 ----------------------------------------------------- (Address of principal executive offices and Zip Code) (928) 778-1450 -------------- (Registrant's telephone number) www.rockymountainminerals.com ----------------------------- (Internet Website) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes /X/ No / / Indicate by check mark whether the registrant is an accelerated filer, (as defined in Exchange Act Rule 12b-2): Yes [ ] No [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the exchange Act): Yes [ ] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class Outstanding at June 10, 2007 Common stock, $.001 par value 100,712,039 shares ROCKY MOUNTAIN MINERALS, INC. INDEX TO FORM 10-Q PAGE ---- PART 1. FINANCIAL INFORMATION: Item 1. Financial Statements Consolidated Balance Sheet, October 31, 2006 (audited) and April 30, 2007 (unaudited).............................. 1-2 Consolidated Statements of Operations for the Six Months and Three Months ended April 30, 2007 and 2006 and Cumulative Amounts Since Inception (unaudited)................................. 3 Consolidated Statements of Cash Flows for the Six Months Ended April 30, 2007 and 2006 and Cumulative Amounts Since Inception (unaudited)................................................... 4 Notes to Consolidated Financial Statements (unaudited)........ 5-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................... 6-11 Item 3. Quantitative and Qualitative Disclosures About Market Risk................................. 11 Item 4. Controls and Procedures....................................... 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings............................................. 11 Item 2. Changes in Securities and Use of Proceeds..................... 11 Item 3. Defaults Upon Senior Securities............................... 11 Item 4. Submission of Matters to a Vote of Securities Holders............................................ 11 Item 5. Other Information............................................. 11 Item 6 Exhibits and Reports on Form 8-K.............................. 12 Signatures.................................................... 12 PART I. FINANCIAL INFORMATION ITEM 1. ROCKY MOUNTAIN MINERALS, INC. (A Development Stage Company) CONSOLIDATED BALANCE SHEET ASSETS (Amounts in thousand, except per share data) October 31, April 30, 2006 2007 (Audited) (Unaudited) ---------- ---------- ASSETS Current Assets: Cash $ 48 $ 7 Prepaid items - 3 ---------- ---------- Total current assets $ 48 $ 10 Assets held for sale-net (Note 2) 150 150 Investment in joint venture (Note 4) 108 108 Deferred offering costs -- 20 --------- ---------- TOTAL ASSETS $ 306 $ 288 ========= ========== See accompanying notes. (1) ROCKY MOUNTAIN MINERALS, INC. (A Development Stage Company) CONSOLIDATED BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITY (Amounts in thousands, except per share data) October 31, April 30, 2006 2007 (Audited) (Unaudited) ------- --------- Current liabilities: Accounts payable $ 1 $ 35 Accrued Interest-related party (Note 5) 5 6 Registration costs 40 40 -------- --------- Total current liabilities 46 81 Long term liabilities: Note payable-related party (Note 5) 23 23 -------- --------- Total long term liabilities 23 23 Stockholders' equity: Preferred Stock; $.05 par value, $.015 cumulative dividends, convertible; 44,000,000 shares authorized, 44,000,000 shares issued and outstanding 2,200 2,200 Common Stock; $.001 par value, 250,000,000 shares authorized, 100,712,039 (2006) 100,712,039 (2007) shares issued and outstanding 101 101 Capital in excess of par value 3,971 3,971 Deficit accumulated during the development stage (6,035) (6,089) Accumulated other comprehensive income -- 1 -------- --------- Total stockholder's equity 237 184 -------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 306 $ 288 ======== ========= See accompanying notes. (2)

*Less than $0.01 per share. See accompanying notes. (3)

See accompanying notes. (4) ROCKY MOUNTAIN MINERALS, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Unaudited) The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Certain notes and other information have been condensed or omitted from the interim financial statements presented in this report. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the financial statements reflect all adjustments considered necessary for a fair presentation. The results of operations for the six months ended April 30, 2007 and April 30, 2006 are not necessarily indicative of the results to be expected for the full year. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended October 31, 2006 as filed with the Securities and Exchange Commission. Note 1: Organization Rocky Mountain Minerals, Inc (variously the "Company", the "Registrant" and "RMMI") was incorporated in Wyoming on May 19, 1978 and is considered to be a mining company in the exploratory stage and a development stage company as defined by SFAS No. 7, and since inception, has been engaged in the assessment of resource exploration properties. Note 2: Income Taxes No provision for income taxes is required for the period ended April 30, 2007 or 2006, because (a) in management's opinion, the current year will result in a net operating loss, (b) there are no previous earnings to which the current year's estimated loss may be carried back, and (c) there are no recorded income tax deferrals to be eliminated. Note 3: Loss per Share/Common Stock Loss per share is based on the weighted average number of shares of common stock outstanding during the six months ended April 30, 2006 and 2007, 99,076,680 shares in 2006 and 100,712,039 shares in 2007. The weighted average number of shares of common stock outstanding during the three months ended April 30, 2006 and 2007 was 100,712,039 and 100,712,039. The weighted average number of shares of common stock outstanding during the period from inception through April 30, 2007 is 66,909,957. Note 4: Investment in Joint Ventures The Company's investment in the Exmouth Joint Venture reflects its 25% residual interest in two petroleum exploration permits, offshore Western Australia following the transactions referred to with BHP Billiton and Apache (see Oil & Gas Exploration activities), including the deferred consideration and the royalty interest. The capitalized cost reflects the issue of preferred and common stock at the market price at the date of stock issuance. In addition, the Company recorded an estimate of $40,000 for the costs to register the restricted stock. (See Item 2-Oil & Gas Exploration Activities). (5) In November 2006, our wholly owned subsidiary, RMMI Australia Pty Ltd (RMMI), entered into a joint venture heads of agreement with Eagle Bay Resources N.L. and Audax Resources Limited, in respect to the "Carr-Boyd Joint Venture". To earn our 51% interest in the two exploration licenses, RMMI must contribute AU$1 million (the "Contribution") to the joint venture expenditure prior to September 30, 2010, and to spend at least AU$100,000 in the first six months following the execution of the Carr Boyd Agreement. RMMI also agreed to contribute at least AU$48,000 towards the joint venture expenditure for each exploration license per permit year. Note 5: Related Party Transactions Mr. E Geoffrey Albers, a former director of the Company and a holder of more than 5% of the common stock, is a director and shareholder of Great Missenden Holdings Pty Ltd. In May 2004, the Company signed a Promissory Note Agreement with Great Missenden Holdings whereby the company borrowed $22,000. The note bears interest of 10% per annum and is payable on or before May 1, 2007. The note is convertible into shares of the Company's Common Stock at any time after 18 months on the basis of 50,000 shares of Common Stock for every $1,000. The Company has the right to repay in full at any time during the first 18 months. On April 30, 2007, we entered into a non-negotiable convertible promissory note with Great Missenden Holdings Pty. Ltd. Great Missenden Holdings Pty Ltd is owned by Ernest Geoffrey Albers, a former director of the Company who retired on July 31, 2006. Pursuant to the Note, Great Missenden Holdings Pty Ltd will advance up to an aggregate total of $300,000, to be advanced as follows: $75,000 upon signing of the Note, and $75,000 on each of May 31, 2007, June 30, 2007 and August 31, 2007. As of the date of this report, $150,000 has been received pursuant to this Agreement. The Company may, in its sole discretion, waive the advancement of any or all of the foregoing installments. The Note bears interest at a rate of 9% per annum, and is payable in full on June 30, 2008. The principal amount then outstanding under the Note is convertible by Great Missenden Holdings Pty Ltd at any time into shares of common stock of the Company at a conversion price of $0.025 per share. In addition, the Note is automatically convertible immediately prior to a merger of the Company with a wholly-owned Delaware subsidiary of the Company, into such number of shares of the Company's common stock which would result in the Lender owning 10% of the outstanding shares of the Delaware subsidiary after the merger. With regard to the interest in the Exmouth Joint Venture, Mr. E Geoffrey Albers is a director and shareholder in each of Octanex NL and Strata Resources NL. All of these companies, with RMMI, are the holders of the Exmouth Joint Venture. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking Information This quarterly report contains certain statements that may be deemed forward-looking statements within the meaning of Section 27 of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the United States Securities Exchange act of 1934, as amended (Exchange Act). Readers of this quarterly report are cautioned that such forward-looking statements are not guarantees of future performance and that actual results, developments and business decisions may differ from those envisaged by such forward-looking statements. All statements, other than statements of historical facts, so included in this quarterly report that address activities, events or developments that the Registrant intends, expects, projects, believes or anticipates will or may occur (6) in the future, including, without limitation: statements regarding the Registrant's business strategy, plans and objectives and statements expressing beliefs and expectations regarding the ability of the Registrant to secure the leases necessary to facilitate anticipated drilling activities and the ability of the Registrant to attract additional working interest owners to participate in the exploration and development of oil and gas reserves, are forward-looking statements within the meaning of the Act. These forward-looking statements are and will be based on management's then-current views and assumptions regarding future events. Critical Accounting Policies The Company has identified the accounting policies described below as critical to its business operations and the understanding of the Company's results of operations. The impact and any associated risks related to these policies on the Company's business operations is discussed throughout this section where such policies affect the Company's reported and expected financial results. The preparation of this Quarterly Report requires the Company to make estimates and assumptions that affect the reported amount of assets and liabilities of the Company, revenues and expenses of the Company during the reporting period and contingent assets and liabilities as of the date of the Company's financial statements. There can be no assurance that the actual results will not differ from those estimates. Undeveloped mineral interests and oil and gas properties: The Company utilized the "successful efforts" method of accounting for undeveloped mineral interests and oil and gas properties. Capitalized costs were charged to operations at the time the Company determined that no economic reserves existed. Costs of carrying and retaining undeveloped properties were charged to expense when incurred. Proceeds from the sale of undeveloped properties were treated as a recovery of cost. Proceeds in excess of the capitalized cost realized in the sale of any such properties, if any, were to be recognized as gain to the extent of the excess. Impairment of long-lived assets: The Company evaluates the potential impairment of long-lived assets in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company quarterly reviews the amount of recorded long-lived assets for impairment. If the carrying amount of a long-lived asset is not recoverable from its undiscounted cash flows, the Company will recognize an impairment loss in such period. Investment in Joint Venture The Company's investment in the Exmouth Joint Venture reflects its 25% residual interest in two petroleum exploration permits, offshore Western Australia following the transactions previously referred to with BHP Billiton and Apache, including the deferred consideration and the royalty interest. The capitalized cost reflects the issue of preferred and common stock at the market price at the date of stock issuance. In addition, the Company recorded an estimate of $40,000 for the costs to register the restricted stock. Results of Operations Background The Company began operations on May 19, 1978 and is considered to be a mining and oil and gas royalty company in the exploratory stage and has had no (7) significant revenues. In 1984 the Company ceased gold extraction operations at its Rochester, Montana mining property. During 1988, with the receipt of funding from a stock purchase agreement, it resumed mineral exploration both at Rochester and elsewhere in North America and Australia. Despite detailed geologic investigations by the Company and by leading gold exploration companies, there was insufficient encouragement from results to warrant further investigations or activities at Rochester. In 2002 and 2003 the Registrant sold thirteen patented mining claims in the Rochester Mining district for $82,192 and is pursuing the sale of the additional eighteen mining claims in the district. The Registrant anticipates receiving approximately $150,000 from the remaining property and recorded an impairment loss in the carrying amount of Assets held for sale of $268,000 during the third quarter of 2003. General and administrative expenses increased for the six months ending April 30, 2007 as compared to the six months ended April 30, 2006 primarily due to the Company's increased level of activity in evaluating various business opportunities and exploration costs in connection with the Carr-Boyd Joint Venture. The Company plans to seek out further natural resource exploration and production properties in the Rocky Mountain region of the U.S. and also in Australia. The Company has a representative office in Melbourne, Australia and Prescott, Arizona. Plan of Operation General The Registrant is focused on exploration and development of natural resources. Our core business is directed at the acquisition of interests in oil and gas prospects in the offshore areas of Australia's territorial waters. The Company is also dedicated to exploring, and if warranted, developing and mining nickel prospects in Australia. We rely on the considerable experience in the resources industry of our directors and our consultants to identify and conduct initial analyses of properties in which we may acquire an interest. We devote essentially all of our efforts to the identification of high quality natural resource properties and seek to keep our overheads at a minimum level through the retention of carefully selected consultants, contractors and service companies. We use proven technologies to evaluate prospects before acquiring a working interest. Generally, we expect to invest in projects at different levels of participation. We plan to maintain as high a percentage of participation as can be prudently managed. We will focus on areas which can be farmed out and/or developed in conjunction with other industry players. We intend to consistently minimize our financial outlay requirements, wherever possible, through promoted farm-out transactions to provide maximum leverage for shareholders at minimal cost. Oil and Gas Exploration Activities In April 2003 the Registrant by way of a Farmin Agreement ("Farmin Agreement") subsequently approved by the Western Australian Offshore Petroleum Authority (the "Designated Authority") acquired a 25% interest in the Exmouth Joint Venture which held two petroleum exploration permits, WA-322-P and WA-329-P, granted and authorized by the Australian government in the North West Shelf area of the Carnarvon Basin, offshore Western Australia, from two Australian public companies. The area represented by the permits is approximately 356,000 acres, and the project is known as the Exmouth Joint Venture. In agreeing to earn a 25% interest in the project, the Registrant issued 15,000,000 shares of Restricted Common Stock and 19,091,550 shares of Restricted $0.015 Cumulative Convertible Preferred Stock to meet a $969,550 funding requirement associated with the interest. The initial (8) exploration program has consisted of acquiring and interpreting existing open-file seismic data including 2D and 3D seismic data sets, and the planned shooting of new seismic surveying. In early 2004 the Exmouth Joint Venturers entered into and subsequently settled an agreement with a subsidiary of BHP Billiton Petroleum Limited ("BHP") for the sale of Exploration Permit WA-322-P to BHP . In return BHP agreed to the acquisition and processing of 3D seismic in the Joint Venture's adjacent exploration permit, WA-329-P, as well as a $600,000 initial cash payment, a deferred cash payment of $1,100,000 contingent upon BHP drilling a well in WA-322-P and the granting of an overriding royalty interest ranging from 2.75 to 3.75 percent with respect to revenue from any future production from WA-322-P, less applicable petroleum resource rent tax, depending on the level of aggregate production. The Exmouth Joint Venture has acquired an extensive body of existing geological data available in relation to WA-329-P and WA-322-P, including a large amount ofseismic data, together with pertinent existing reports and basic data collected by previous operators in the area. In addition, BHP agreed to acquire and process a new seismic on behalf of the Exmouth Joint Venture in WA-329-P as part of the terms of their acquisition of WA-322-P. In July 2004 the Registrant's 25% share of the initial cash proceeds from the BHP sale, $150,000, were offset against existing year 2 seismic acquisition obligations pursuant to the Farmin Agreement. As a term of this arrangement the Registrant entered into an agreement to reacquire 10,000,000 shares of Common stock in previously issued to Octanex NL and Strata Resources NL, the Registrant's Joint Venture partners, for no further outlay. The 10,000,000 shares have been reconveyed and the investment in the Joint Venture has been reduced with a corresponding reduction in Common Stock and capital in excess of par value. All subsequent seismic commitment costs in WA-329-P were agreed to be shared pro rate between the Exmouth Joint Venture participants. However, as a result of the transaction with BHP it is expected that there will be no further seismic costs to be born by the Exmouth Joint Venture in relation to the year 2 seismic commitment for WA-329-P. BHP Billiton is contractually committed to the Exmouth Joint Venturers to shoot the 55 km2 of 3D seismic for the benefit of the Exmouth Joint Venture in WA-329-P. In addition, BHP Billiton has also indicated that they will shoot a further 80 km2 in WA-329-P as ingress data which, if shot, will also be made available to the Exmouth Joint Venture. Costs associated with the shooting of 3D seismic data are usually in the order of (AUD) $10-12,000 per km2 depending on size of shoot, weather and other environmental factors. The Exmouth Joint Venture was informed that BHP had completed 635 km2 of 3D seismic work on Exploration Permit WA-322-P and 107 km2 of 3D seismic work on Exploration Permit WA-329-P in October, 2005. On April 18, 2005 the Exmouth Joint Venture entered into a Letter of Offer from BHP Billiton Petroleum and Apache Northwest, Pty, Ltd. to acquire 100% interest in Exploration Permit WA-329-P. A finalized Sales and Purchase Agreement, Royalty Agreement and Transfer of Title was executed July 8, 2005. The sale consists of the buyers becoming responsible for the terms and conditions of the Permit, a $400,000 cash payment, which was paid August 9, 2005, a deferred cash payment of $1,000,000 contingent upon the drilling of a well in WA-329-P, and the grant of an overriding royalty interest ranging from 2.75 to 3.75 percent should there be any future production. We have been informed by BHP Billiton that in Permit WA-329-P, a suspension and extension for the year 4 work program has been sought. BHP Billiton has not been advised as yet of the outcome of their suspension and extension request. Regarding Permit WA-322-P, a large regional seismic survey was undertaken by BHP Billiton and they are currently interpreting the seismic data. (9) Mineral Activities In December 2006, our wholly owned subsidiary, RMMI Australia Pty Ltd, together with Australian Stock Exchange listed company's, Audax Resources Ltd and Eagle Bay Resources N.L. entered into a Joint Venture Heads of Agreement, in respect to the "Carr-Boyd Joint Venture". The purpose of the joint venture is to explore and, if warranted, develop and mine sulhide hosted nickel. Our exploration licenses, EL31/491 and EL31/492, are located near Carr-Boyd in Western Australia. An assessment of digitally captured Open File surface geochemical data has been completed. Five anomalies have been defined primarily utilising -0.825mm samples taken on a 400 by 400m regional grid. A field trip was undertaken on our nickel tenement interests in the Eastern Goldfields of Western Australia on April 26 and 27, 2007. Mark A Muzzin our President, was accompanied by Dr Nigel Brand, Geochemist and Anthony Rechner, Geologist. The overall objectives of the field trip were with specific objectives set for each site: o Assess their field relationship in terms of regolith and recognizable geology. o Assess the effectiveness of historical soil surveys. o Visit drill lines and costeans to assess the geology. The field trip has encouraged us to further evaluate our areas, and a thorough geochemical program has been devised and will be undertaken during the next quarter. Through our wholly owned subsidiary, RMMI Australia Pty Ltd, we have also entered into a Joint Venture Heads of Agreement with Eagle Bay Resources N.L., known as the "Australian Nickel Joint Venture". The joint venture participants will hold a 50:50 interest in any areas the joint venture acquires. The joint venture is currently actively searching for suitable nickel areas in Western Australia. The joint venture has been advised that it has been successful in its application for an area that will be known as Falcon Bridge Joint Venture. The area has not been designated with an exploration licence as yet, as Native Title compliance matters are being addressed. Liquidity and Capital Resources Since ceasing milling operations at its Rochester, Montana property in 1984, the Registrant has evaluated this and other mineral properties, as well as having pursued waste management activities. The waste management assets have been sold and the Registrant has its Rochester property on the market for sale and anticipates receiving approximately $150,000 for the remaining property. Management plans to use the funds from the sale of the Rochester property to fund the Company's evaluation of natural resource exploration and production opportunities. Plans for additional funding of these activities include attempting to obtain external funding, either through the sale of the Company's common or preferred stock. Funding When the Company requires further funds for its programs, then it is the Company's intention that the additional funds would be raised in a manner deemed most expedient by the Board of Directors at the time, taking into account budgets, share market conditions and the interest of industry in co-participation (10) in the Company's programs. When additional funds for exploration are required, it is the Company's plan that they could be raised by any one or a combination of the following manners: stock placements, pro-rata issue to stockholders, and/or a further issue of stock to the public. Should these methods not be considered to be viable, or in the best interests of stockholders, then it would be the Company's intention to meet its obligations by either partial sale of the Company's interests or farm out, the latter course of action being part of the Company's overall strategy. Should funds be required for appraisal or development purposes the Company would, in addition, look to project loan finance. See Note 5 for a description of a current financing agreement, specifically, a promissiory note. Item 3. Quantitative and Qualitative Disclosures About Market Risk We do not engage in transactions in derivative financial instruments or derivative commodity instruments. As of April 30, 2007, our financial instruments were not exposed to significant market risk due to interest rate risk, foreign currency exchange risk, commodity price risk or equity price risk. Item 4. Controls and procedures Management of the Company, under the supervision and with participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the effectiveness of the Company's disclosure controls and procedures as defined in the Securities Exchange Commission ("SEC") Rule 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based upon that evaluation, management has concluded that the Company's disclosure controls and procedures are effective to ensure that information it is required to disclose in reports that it files or submits under the Securities Exchange Act is communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure and it is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. During the three months covered by this Report, there have been no significant changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II. OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds None. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Securities Holders None. Item 5. Other information None. (11) Item 6. Exhibits and Reports on Form 8-K. List of Exhibits 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Reports on Form 8-K On April 30, 2007, we filed a report on Form 8-K regarding "Entry into Material Definitive Agreement". SIGNATURES Pursuant to the Requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ROCKY MOUNTAIN MINERALS, INC. (Registrant) Date: June 12, 2007 By: /s/ Mark A. Muzzin --------------------------- Mark A. Muzzin Chief Executive Officer and Chief Financial Officer (12)

ROCKY MOUNTAIN MINERALS INC 10-Q